Supply Chains, Injections and Leakages and Fiscal and Monetary Policy

Supply Chain

The links or activities required to move a product from a supplier to a consumer.

Economic Growth

An increase in the size of a country's output over time, measured by the total amount of production of goods and services in the economy (GDP).

Interdependence

All sectors of the CFI (Circular Flow of Income) are linked together.

Target Rate of Economic Growth

The desired rate of economic growth set by the Australian government, typically between 3-3.5%.

Target Rate of Unemployment

The desired rate of unemployment set by the Australian government, typically at 4.5%.

Target Rate of Inflation

The desired rate of inflation set by the Reserve Bank of Australia (RBA), typically between 2-3% per annum.

Fiscal Policy

The government's spending commitments and collection of taxes from households and businesses.

Deficit

When the government spends more than it receives from taxes, resulting in a shortfall. The government may borrow funds to cover the extra spending.

Surplus

When the government receives more in taxes than it spends, resulting in excess funds.

Monetary Policy

The actions taken by the Reserve Bank of Australia (RBA) to influence the economy, primarily through setting a target for the cash rate (interest rate).

Cash Rate

The interest rate set by the Reserve Bank of Australia (RBA) that influences the interest rates paid by households, businesses, and governments for borrowing and saving money.